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Summary

The claimant was paid earnings on a four-weekly basis. She received 13 payments of wages in a 12-month calendar period. In one UC assessment period, she received two payments of her four-weekly wages. The DWP took both those payments into account as earnings during the single assessment period in which they were received. The claimant appealed, arguing that was wrong given the decisions in Secretary of State for Work and Pensions v Johnson [2020] EWCA Civ 778 (regarding two lots of calendar-monthly paid wages received in a single assessment period) and in R (Pantellerisco) v Secretary of State for Work and Pensions [2020] EWHC 1944 (Admin) (regarding benefit cap exemption and two lots of four-weekly paid wages in a single assessment period). The First-tier Tribunal rejected her appeal, holding that on the facts neither Johnson nor Pantellerisco applied.

Judge May rejected the claimant’s further appeal. The tribunal had been right to hold that on the facts neither Johnson nor Pantellerisco applied in this case, as the circumstances in those cases were ‘substantially different’ (paragraph 9). The relevant rule, at regulation 54(1) of the Universal Credit Regulations 2013, No.376, expressly provided that (subject to specified exemptions) earned income was to be taken into account in the assessment period in which it was received. The claimant had asserted that, although based on different facts, the Johnson and Pantellerisco decisions meant that the treatment of her wages was wrong, but had made no specific submission on what should then happen. It appeared to the judge that the claimant was in effect seeking to have one of the payments received excluded. ‘That,’ said the judge, ‘I am not prepared to do as it flies in the face of what the regulation actually says’ (paragraph 13).

The judge agreed with the Secretary of State’s submission that Johnson did not apply, as in that case the claimant was paid calendar-monthly, had received two payments of wages in the one assessment period due to a ‘non-banking day salary shift’ and had lost out on the work allowance, none of which applied here. He also agreed that in Pantellerisco the issue was that the claimant, because of a pattern of receiving two lots of four-weekly wages in one assessment period, lost out on the benefit cap exemption at regulation 82 of the Universal Credit Regulations 2013, and again that did not apply in this case. Although the judge was aware that the decision in Pantellerisco was currently under appeal to the Court of Appeal, given these findings he saw no point in delaying making a decision in this case.

Comment from CPAG

The judge made no attempt to criticise the decisions in Johnson or in Pantellerisco. Rather, as was also the case in NM v SSWP [2021] UKUT 46 (AAC), the particular facts of the case meant that they did not apply, and instead the default position of taking earned income into account in the assessment period in which it is received did. The Court of Appeal has now heard submissions in Pantellerisco, and a decision is awaited.

Summary

The claimant was 82 years old. He and his wife had been required to leave their accommodation at their daughter’s house and had recently moved into rented accommodation and claimed HB. In his claim, the claimant correctly disclosed his teacher’s monthly occupational pension. The local authority erroneously treated the monthly figure as an annual figure, leading to an overpayment. Although wholly caused by official error, the local authority decided that the overpayment was recoverable. It claimed that the claimant could reasonably have been expected to identify the error in the calculation sent to him allegedly explaining how his HB had been calculated and realise he was being overpaid. That decision was upheld by the First-tier Tribunal.

Judge Perez allowed the claimant’s appeal and substituted a decision that the overpayment was not recoverable from him. The tribunal had erred in giving inadequate reasons, making inadequate enquiry and findings about the question of whether the claimant could reasonably have been expected to have realised he was being overpaid. The overpayment had been caused by official error to which the claimant had not contributed. On the facts (including the claimant’s age and personal circumstances, as well as the unclear notification of his entitlement), he could not reasonably be expected to have realised he was being overpaid. Under the relevant rule at regulation 81 of the Housing Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006 No.214, the overpayment was not recoverable.

The First-tier Tribunal had held that the claimant should have spotted the local authority’s error in treating the monthly pension as an annual one in the entitlement letter sent by the local authority. The claimant had argued that he could not reasonably have done that, as he was 82 years old, was ‘drowning in paperwork’ having had to move home and register changes of address multiple times, and that the letter about his entitlement had ‘bundles of figures’ which did not make the error clear. Judge Perez agreed with the claimant. The length, layout and font of the letter, the fact that the instruction to check the figures used was not clearly shown, with many figures being broken down by the local authority and used in ways in which the claimant had not used them, all meant that the tribunal had erred in not explaining why it considered that the error was clearly displayed in the entitlement letter. Further, the tribunal seemed to have placed reliance on the claimant having been a lecturer, without actually considering what the claimant was lecturing in, which was bricklaying. The tribunal had also failed to enquire into, and make findings of fact about, other relevant issues, including his age, his state of health, his feelings about being drowned in paperwork and the possible confusion from how what he had called his ‘teacher’s pension’ was categorised as an occupational pension. These, and other factors including that he and his wife had just been obliged to move house and claim HB for the first time, meant that the claimant could not have been expected to have realised he was being overpaid. The overpayment was therefore not recoverable from him.

Comment from CPAG

Advisers may find the local authority’s argument that the claimant should have spotted the local authority’s error a very familiar one. It should be surprising that tribunal should agree where the facts, as here, very clearly indicate otherwise. The decision is rooted in the particular facts, but some of those, including the complexity of the local authority entitlement letter and the claimant’s difficulty in comprehending it, are common.

Summary

The claimant was entitled to both components of personal independence payment (PIP) at the standard rate. On 7 November 2020, due to the Covid-19 pandemic, the duration of those awards was extended to 16 July 2022 (‘the extension decision’). On 18 May 2022, following a DWP ‘planned review’, the awards were superseded to award the claimant both components at the enhanced rate for the period 16 July 2021 to 17 May 2025 (‘the enhanced rate decision’). However, on 22 July 2021, the claimant had also been sent a letter from the DWP (‘the 22 July letter’) thanking the claimant for being asked to look at her award again and saying it had been decided to award her the standard rate of both components for the period 18 July 2018 to 16 June 2022. The claimant appealed against the 22 July letter, but the tribunal struck it out. It held there was no jurisdiction to consider the appeal as, on the facts (which included that the clamant had not requested a review and the DWP could find no record of a decision or of a mandatory reconsideration concerning it), the 22 July letter was not a decision.

Judge Church upheld the decision of the tribunal. The tribunal had been entitled to find that the 22 July letter was not itself a decision and did not establish that the decision it purported to describe had been made. The tribunal was therefore entitled to conclude that there was no decision for the claimant to have appealed against and was accordingly bound to strike out the proceedings for lack of jurisdiction.

In the Upper Tribunal, after considering evidence from the claimant and the DWP, the judge remarked that ‘the genesis of the 22 July letter remains something of a mystery’ (paragraph 21). There was no evidence that the claimant had requested a review (ie, by revision or supersession) of her PIP award, and there was no record or obvious reason why the Secretary of State would have done so on her own initiative. The tribunal had therefore been entitled to find that the letter was issued in error and was not a decision. It followed inexorably from that that the tribunal was bound to conclude that it had no jurisdiction and so to strike out the appeal under rule 8(2)(a) of the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008, SI No.2685. Further, even if the 22 July letter could somehow be considered a decision, it was not a decision either to revise or to supersede the extension decision, but rather ‘...to leave the extension decision exactly in place as it was. As such, the only decision against which a right of appeal lay was the extension decision, and that was not the decision under appeal in the proceedings before the tribunal.’

Comment from CPAG

It is disappointing that the Secretary of State seems to have been at a loss to explain her own letter to the claimant. The judge is correct in holding that, even if the letter could have been considered to be a decision, a decision refusing to revise means that it is the original decision that must be appealed against. But it should be remembered that (although this did not arise from the unusual facts of the present case) a refusal to revise that follows a mandatory reconsideration will make such an appeal possible. Under rule 22(2)(d)(i) of the Tribunal Rules, a refusal to revise following a mandatory reconsideration means that the time limit for making the appeal does not start until the date the claimant was sent the mandatory reconsideration notice. Also, a refusal to revise a decision on the ground of official error could, depending on the case, still constitute a mandatory reconsideration even outside the usual absolute time limit for mandatory reconsideration (PH v SSWP (DLA) [2018] UKUT 404 (AAC), reported as 2019 AACR 14).

Summary

The claimant reached pensionable age on 20 August 2021. He did not claim state pension at that point and carried on working. He made an online claim for state pension on 17 August 2022. In that claim, he clearly indicated that he wished to claim from his 67th birthday, which was on 20 August 2022. He was awarded state pension, including an increase for deferring entitlement, from that date. However, the claimant had made a mistake and had intended to ask for backdating to 20 August 2021. Having been refused that, the First-tier Tribunal (FTT) allowed his subsequent appeal on the basis that the decision starting entitlement from August 2022 was capable of revision on any ground to correct that mistake.

Judge Wright allowed the further appeal of the Secretary of State and substituted a decision that the First-tier Tribunal had erred in law and that the claimant’s appeal to it was dismissed – ie, with the effect that the date of claim was 20 August 2022. The tribunal had erred in considering that the Secretary of State’s decision could have been revised so as to backdate the claim for a year. Even though the claimant had indeed made a mistake in asking for his claim to start in August 2022, he had clearly indicated that date on his claim and the structure of the state pension rules did not permit that to be changed once the claim had been decided upon. There was no parallel with the rules on extending the time to claim (in effect, backdating) universal credit (UC), as adjudicated on by the Court of Appeal in Secretary of State for Work and Pensions v Miah [2024] EWCA Civ 186, reported as [2024] 1 WLR 3012, which were quite different.

The claim was decided on 17 August 2022. Judge Wright agreed with the Secretary of State that after the claimant’s having chosen his date of claim and the claim having been decided on that basis, there was ‘no proper basis’ for the Secretary of State, or the tribunal, to have then decided differently (paragraph 33). Although under regulation 5(1) of the Social Security (Claims and Payments) Regulations 1987 the claimant had been able to amend his claim (ie, to ask for backdating) at any time before it was decided, he had not done so. The claim form had been very clear, and there was no dispute that the claim had been correctly decided. Having been decided, the claim no longer existed and could no longer be amended. ‘Given all this,’ said the judge, ‘I can identify no lawful basis for the Secretary of State or the FTT on appeal changing the start date of entitlement to the state pension, as to do so would be to amend the claim after it had been decided and after it had ceased to exist’ (paragraph 37). It was important to note that the rules on the state pension placed in the hands of the claimant the choice between claiming on reaching pensionable age or deferring until a later date. The tribunal was not permitted to act on the wish of the claimant, subsequent to the decision adopting that choice, to change it. Nor did anything in Miah alter that. The issue in Miah was whether a UC claim had been made within the time and (in the judge’s words) ‘where there was an absence of evidence about the date from when Mr Miah wished to claim his universal credit.’ The ‘essence’ of the court’s decision was the conclusion that whether UC had been claimed in time ‘could be determined (on revision or on appeal) like any other issue going to entitlement’. That was different to the present case, which was about state pension where the claimant had clearly indicated he wanted to defer his claim and his entitlement until his 67th birthday (paragraph 48).

Comment from CPAG

This decision, as the judge makes clear, is predicated on the very particular arrangements regarding date of claim and deferral on entitlement in the state pension rules. As the judge (and the Secretary of State in her submission) also makes clear, that is very different from the UC context and Miah, where there is no requirement on claimants to indicate a wish for backdating and it is for the Secretary of State to consider that when making the decision.

Summary

In this decision the High Court held that the two years’ residence requirement that was part of Sandwell’s council tax reduction scheme was unlawful, on numerous grounds. See the article in Bulletin 242, p4.

Summary

The claimant appealed against the decision of the First-tier Tribunal about whether she satisfied the work capability assessment. She was assisted at the tribunal and in her further appeal by a representative. In applying for permission for further appeal, the representative said that he had wished to give evidence at the tribunal on behalf of the claimant about the matters with which his organisation had felt it necessary to assist her, but had been told by the judge that he could only ask his client questions or make a submission.

Allowing the claimant’s further appeal and remitting the case to a new tribunal, Judge Gray commented on that, although he decided the case on another matter and did not have the benefit of argument on it (paragraph 3). The judge said that the tribunal would have been entitled to hear the representative’s evidence, as ‘there is nothing to prevent a representative from giving factual evidence of matters within their knowledge’. It was of course a matter for the tribunal to assess the weight of such evidence, in the way that they weigh any evidence (paragraph 6).

In so commenting, the judge endorsed the finding of Commissioner (as he then was) Jacobs in CDLA/2462/2003, where he said, ‘the tribunal must take care to distinguish evidence from representation so that the former’s provenance is known and can be the subject of questioning by other parties. But subject to the practicalities of the way in which the taking of the evidence is handled, there is no objection in principle to the same person acting in different capacities as a witness and as a representative. Nor is there any reason in principle why the probative value of evidence should depend upon whether or not it came from a representative’ (paragraph 7).

Summary

The claimant’s appeal included whether he had limited capability for work by virtue of the ‘substantial risk’ provision at regulation 35 of the Employment and Support Allowance Regulations 2008 No.794. He had previously been entitled on that basis, mentioned it when requesting a mandatory reconsideration, and the Secretary of State made explicit reference to the decision on mandatory reconsideration and in the appeal papers. The First-tier Tribunal dismissed the appeal and said in its decision: ‘The appellant was represented by an experienced representative. No submissions were made for the tribunal to consider regulation 35 and so this regulation was not considered by the tribunal.’

Judge Wright set the decision aside and remitted the case to a fresh tribunal. The tribunal had erred in not considering regulation 35, as it was plainly an issue raised by the appeal. In such a case, it was irrelevant that it was not specifically addressed by the claimant’s representative’s submission. In so holding, the judge held that a number of previous decisions (CSIB/389/1998, CSIB/588/1998, CSDLA/336/2000 and CSIB/160/2000) should be disregarded, to the extent that they held that where the appeal raises a matter, a tribunal may rely on the representative’s submission in not considering it. ‘In essence,’ held the judge, ‘the tribunal erred in law by abrogating its legal obligation under section 12(8)(a) of the Social Security Act 1998 (‘SSA’) to consider all issues raised by the appeal and in treating the representative’s stance (as the tribunal understood it to be) as relieving the tribunal of its duty under section 12(8)(a) to consider the issues raised by the appeal before it’ (paragraph 3).

Given the decision-making history, the terms of the claimant’s request for mandatory reconsideration and the Secretary of State’s own response, it was common ground that the issue of regulation 35 was ‘raised’ by the appeal. Further, following MN v SSWP (ESA) [2013] UKUT 262 (AAC), reported as [2014] AACR 6, and DH v SSWP (ESA) UKUT 573 (AAC), the consequence of sections 2(3)(b) and 4(5)(b) of the Welfare Reform Act 2007, which give as a condition of entitlement to the work-related activity component of employment and support allowance (ESA) ‘that the claimant does not have limited capability for work-related activity’, means that an affirmative decision had to have been made in the decision under appeal that regulation 35(2) of the ESA Regulations was no longer satisfied. Authority in Mongan v Department of Social Development [2005] NICA 16, reported as R 3/05 (DLA), and in Hooper v Secretary of State for Work and Pensions [2007] EWCA Civ 495, reported as R(IB) 4/07, was that if an issue was ‘clearly apparent from the evidence’ in an appeal then it was ‘raised’ by the appeal, irrespective of whether that had been clearly identified by the appellant or her/his representative. As Judge Wright said in his own decision in ET v SSWP (PIP) [2017] UKUT 478 (AAC), ‘properly read the language of section 12(8)(a) means a First-tier Tribunal must consider an issued that is raised by the appeal’ (paragraph 24). The decisions in CSIB/389/1998, CSIB/588/1998, CSDLA/336/2000 and CSIB/160/2000 may still apply in so far as, where a tribunal is seeking to establish whether an issue is ‘clearly established from the evidence’, a representative may have a relevant role. But in so far as they put a gloss or limit on the express duty to consider an issue raised by the appeal, they should be disregarded. A representative cannot remove such an issue from consideration (paragraph 30).

Comment from CPAG

This decision restates, and to some extent re-establishes, the fundamental duty of a tribunal to consider issues raised by the appeal (ie, those ‘clearly apparent from the evidence’), irrespective of the representative’s submission. It is explicitly in conflict with the older authority cited in the decision that qualifies that regarding submissions from a representative. It is more closely reasoned than that authority, and is certainly more recent. Tribunals will need to be clear about what they consider is or is not raised by the appeal; representatives can and should still be clear about what issues they wish the tribunal to focus on.

Summary

The claimant’s request for a mandatory reconsideration of his tax credits decision was made 35 days outside the standard 30-day time limit for making such a request (but within the absolute time limit of 13 months). HM Revenue and Customs (HMRC) determined that the request was late and that therefore it would only consider it in ‘special circumstances’. It said the request could not be accepted, although the decision about this indicated that HMRC had taken into account the claimant’s reasons for lateness (he reported language problems and illness) and the alleged error (mistake about his selfemployed status and income). The First-tier Tribunal struck out the claimant’s appeal, holding it had no jurisdiction as there had been no mandatory reconsideration and therefore there was no right of appeal.

Judge Scolding QC allowed the claimant’s appeal against the strike-out, reinstated the claimant’s appeal and directed the First-tier Tribunal to consider it. The tribunal had erred in holding that it had no jurisdiction. The correct position was that HMRC had carried out a mandatory reconsideration, and so therefore the claimant did have the right of appeal. In so holding, the judge had reference to the decision of the tribunal of judges in R (CJ) v SSWP (ESA) [2017] UKUT 324, reported as [2018] AACR 5, a decision that held that for benefits there was a right of appeal where a mandatory reconsideration had been made late (but within the absolute 13-month time limit) and the DWP had refused to admit it.

In argument before the judge, HMRC submitted that the present case was distinguishable from that in CJ, as that was a benefits case, and the relevant law for tax credits was materially different. Section 38(1A) of the Tax Credits Act 2002 requires a mandatory reconsideration (referred to there as a ‘review’) to have been ‘carried out’ in order for appeal rights to arise; it was submitted that, therefore, where HMRC had refused to accept the late appeal, there had been no mandatory reconsideration. But the judge rejected that. The rules for benefits and tax credits, although differently worded, had ‘the same statutory purpose’, which was to ‘create a state prior to an appeal where the Secretaries of State for Work and Pensions or HMRC can consider the decision again in order to reduce the number of appeals’ (paragraph 17). There was no intention of reducing appeal rights. Applying the reasoning in CJ, and so bearing in mind considerations such as common law fairness and the right to a fair trial in Article 6 of the European Convention on Human Rights, the judge held that ‘carrying out a review’ under section 38(1A) of the Tax Credits Act 2002 ‘must include considering whether to extend time to carry out the review’. HMRC’s contention that there had been no review ‘failed to grapple adequately’ with the fact that the decision about that implicitly sought to uphold the original decision. As in CJ, the availability of judicial review was not an adequate substitute for appeal rights in such cases (paragraph 27).

Comment from CPAG

thanks to Joe Power of Kirklees Citizens Advice and Law Centre for sending us this decision. The decision is an explicit rebuttal of HMRC’s long-held argument that the wording of the relevant tax credit legislation required a different (and restrictive) approach regarding appeal rights after a late mandatory reconsideration to that taken, following the decision in CJ, to benefits. There is indeed no good reason why the tax credits position should be different; however, it remains to be seen if HMRC is to seek to appeal further.

Summary

The claimant had a conviction for benefit fraud involving failure to declare savings. Subsequently, three applications for housing benefit (HB) by the claimant had been refused by the local authority on the basis of its belief that the claimant had excess capital, despite the claimant saying he had spent the money to get rid of gambling debts, and those decisions had been upheld by appeal tribunals. In September 2019, the claimant made a fourth claim for HB. That was again refused. The First-tier Tribunal noted that the claimant had requested a determination on the papers rather than a hearing, drew an inference that he had something to hide, and in September 2020 (having considered the appeal on the papers) refused his appeal.

Judge Wikeley allowed the claimant’s further appeal, setting the decision aside and referring the case to a new tribunal. This was not on the basis of any finding about the claimant’s capital, which would need to be considered afresh by the new tribunal. Rather, the tribunal had erred in not properly considering the claimant’s reasons for not requesting a hearing and the possible need to facilitate a hearing for example by telephone. In his reasons for appealing to the Upper Tribunal, the claimant said: ‘I had paper tribunal because of COVID not to hide.’ Taking this and other relevant circumstances into account, Judge Wikeley concluded that the tribunal had erred on the basis that it had not been fair to proceed without a hearing. As he told the claimant when granting permission to appeal:

‘The first national lockdown began on 23 March 2020 and was still very much in force when the appellant completed the hearing enquiry form on 20 April 2020. The file made it clear that you were aged 74 at the time and had serious medical conditions including the loss of an eye and PTSD [post-traumatic stress disorder]. On that basis surely the natural and obvious inference was that you were staying at home for your own safety and security (and indeed in accordance with official government advice). It may be the tribunal has not done enough here to justify its reasons for proceeding under rule 27 (see eg, FY v Secretary of State for Work and Pensions (ESA) [2017] UKUT 501 (AAC))’ (quoted at paragraph 7).

There were two further reasons for the unfairness. The first of these also related to the COVID pandemic and in particular the availability of telephone hearings, the second to authority on dealing with the credibility of a witness. Again, the judge had set these out when granting permission to appeal (quoted at paragraph 7):

‘11. First, as the pandemic spread, the First-tier Tribunal office began arranging virtual hearings by using telephone hearings or video-platform hearings. The hearing enquiry form issued here implies the choice was either a face-to-face hearing or a paper hearing and nothing in between. If the appellant had been offered a telephone hearing, it is entirely possible that he may have accepted, but he was not given any such opportunity. Caselaw shows that a tribunal which fails to consider the option of adjourning for a telephone hearing may (not necessarily will) have erred in law: see eg, LO’K v Secretary of State for Work and Pensions (ESA) [2016] UKUT 10 (AAC); [2016] AACR 31.

 

‘12. Second, it was obvious on reading the papers on file that the credibility of the appellant’s account was critical. The council understandably pointed to the fact that there was a prior criminal conviction for dishonest non-disclosure of capital assets and that three previous tribunals had refused similar appeals brought by the appellant. Certainly, the fact that a claimant has been found to have lied in the past may indicate a propensity to lie (see eg, SR (Iran) v Secretary of State for the Home Department [2007] EWCA Civ 460). However, being an inveterate liar does not necessarily mean that the person concerned is not telling the truth on this occasion: see KM (Somalia) v Secretary of State for the Home Department [2009] EWCA Civ 466. Arguably, the central importance of credibility meant that the tribunal needed to hear at first hand from the appellant so his account could be properly tested. It is also unclear whether he had ever been advised as to the type of evidence that he might bring forward to support his case – eg, was there evidence of any counselling for gambling addiction? Had he discussed the problem with his GP? Was there evidence that family members could provide about his gambling addiction and debts?.’

Comment from CPAG

This decision is noteworthy in setting out how a claimant’s choice of a paper determination may have been influenced by the COVID pandemic, and how tribunals should bear that and related matters in mind when deciding whether it is indeed in the interests of justice to dispense with a hearing.

Summary

In this decision, the Court of Appeal unanimously held that the requirement in the ‘proof of payment’ rule in universal credit (UC) (at regulation 33(1)(za) of the Universal Credit Regulations 2013, SI No.376) already to have paid childcare costs before they can lead to an award of the childcare element was not unlawful. In so holding, it reversed the previous decision of the High Court in this case.

The rule was not (contrary to the finding of the High Court) unlawful as indirect discrimination on grounds of sex. Giving the lead decision, Lady Justice Andrews held the possible indirect different treatment of women was objectively justified (and so not unlawful). The High Court had wrongly considered that the Secretary of State needed to justify not adopting an alternative (ie, proof of liability) to the proof of payment rule; rather, the challenge involved focusing on the lawfulness of regulation 33 itself. ‘In fact,’ said Justice Andrews, ‘this was a classic example of a case in which a substantial degree of deference should have been afforded to the judgment of the decision maker, especially as the impugned measure had been subjected to parliamentary scrutiny, notwithstanding that this deference would be tempered to some extent by the fact that the ground of discrimination complained of was on the basis of sex, which would require more cogent reasons to justify it than if the differential treatment were on the basis of some other non-suspect ground’ (paragraph 99). The court considered that the evidence of the Secretary of State, ‘provided ample justification for the adoption of the proof of payment rule. The reimbursement model of payment of costs actually expended on childcare fitted with the overall architecture of UC, it was simple to understand and operate and it significantly reduced the problems that had caused major difficulties with the legacy system. The judge’s critique of the justification put forward for the rule failed to accord the appropriate degree of respect for the measure of judgment afforded to Ministers in this area of policy…’ (paragraph 113).

The rule was also not (again contrary to the finding of the High Court), irrational in the sense described by the Court of Appeal in R (Johnson v Secretary of State for Work and Pensions [2020] PTSR 1872. The court did not accept the analogy with Johnson, which concerned an ‘acknowledged arbitrariness’ in the rules about treatment of monthly earnings paid on a non-banking day, and involved a challenge to the decision not to provide a solution to that acknowledged problem (paragraphs 115–116). The ‘narrow confines’ of Johnson had been highlighted by the recent decision of the court in R (Pantellerisco) v Secretary of State for Work and Pensions [2021] EWCA Civ 1454. The high threshold for an irrationality finding was not met. ‘The challenge in the present case is not to a decision refusing to “fine tune” the UC system to cater for an arbitrary harmful impact of the type identified in Johnson. Rather, as in Pantellerisco, it seeks to stigmatise as unlawful one of the elements of the system which was deliberately chosen, and which potentially gave rise to hardship for those who were unable to comply with its requirements or found it difficult to do so. The proof of payment rule was adopted in order to reduce fraud and error and promote simplicity. It fits within the overall scheme of UC as a benefit to be paid in arrears, akin to a salary, supplementing income from work’ (paragraph 126). In conclusion: ‘This was not a case where there was an obvious straightforward solution which it was irrational for the Secretary of State not to have pursued…it cannot be said that “precluding a system where eligibility is based on liability to pay” struck the balance in a way which no reasonable Secretary of State would have done’ (paragraph 127).

Summary

The clamant was entitled to legacy benefits, including child tax credit. In October 2019, following incorrect advice from the DWP to claim UC pending a mandatory reconsideration of a decision about her employment and support allowance, the claimant submitted a claim for UC. However, having taken further advice, the claimant telephoned the DWP to withdraw her UC claim on 7 October (she was never paid UC). But on 9 October, the DWP issued an electronic ‘stop notice’ to HMRC, advising that the claimant had claimed UC and that the Secretary of State was satisfied that she satisfied the basic conditions of entitlement. HMRC terminated entitlement to tax credits. The First-tier Tribunal allowed the claimant’s appeal, upholding her argument that she had withdrawn her claim for UC by the time the stop notice was issued, so that at that time she had not made a claim for UC her tax credits did not fall to be terminated.

Judge Mitchell dismissed the further appeal of HMRC. The tribunal had not erred in law. The claimant had undoubtedly submitted a claim for UC. She had also withdrawn it, exercising her right to do so (before the claim is determined) under regulation 31 of the Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Claims and Payments) Regulations 2013, SI No.380. But what did that mean for this case? The main provision at issue was regulation 8 of the Universal Credit (Transitional Provisions) Regulations 2014, SI No.1230. That provides, at subparagraph (2), for the termination of certain existing legacy benefits, including tax credits, in the event of a claim for UC. But that termination is subject to the requirement in subparagraph (1) that a claim for UC ‘is made’ and that the Secretary of State is satisfied that the claimant satisfies the basic conditions of entitlement. The judge considered that meant that the claim for UC must be in existence at the time of the issue of the stop notice indicating the Secretary of State was so satisfied. Construing regulation 8, the judge held that: ‘in order for a valid regulation 8(1) determination to be made that a UC claimant satisfies the UC basic conditions, that is a determination that triggers the cessation of tax credit entitlement provided for by regulation 8(2), there must be a subsisting UC claim at time of the determination’ (paragraph 31).

The judge had reference to the earlier decision of Judge Jacobs in HMRC v LH [2018] UKUT 306 (AAC). In that case, the claimant had also withdrawn her claim for UC, but after the issue of the stop notice to HMRC. That was crucial as it could not then have retrospective effect. Judge Jacobs said at paragraph 11 of his decision: ‘…My reading of regulation 8(1) is that it requires the simultaneous existence of a claim and the Secretary of State’s satisfaction on the basic conditions. In this case, a claim was made and the Secretary of State was satisfied while that claim existed. That is sufficient. The subsequent withdrawal of the [claim] cannot rewrite history by pretending that the claim was never submitted in the first place.’ HMRC argued that that applied in the present case, even though the claim had been withdrawn before the issue of the stop notice. Rejecting that, Judge Mitchell noted that Judge Jacobs had also considered that for termination there needed to be the ‘simultaneous’ existence of the claim and the Secretary of State’s satisfaction on the basic conditions. Further, the judge considered that to be the legislative intention behind regulation 8 for a number of reasons, including the use of the present tense in the words ‘a claim is made’, that it best ‘preserves claimants’ freedom to order their benefit affairs as they see fit’, and that ‘an interpretation that avoids a gap in entitlement to income-related benefits is to be preferred to one that allows such a gap to arise. On HMRC’s argument, recipients of income-related benefits may, by withdrawing a UC claim, unwittingly engineer a gap in entitlement to income-related benefits’ (paragraph 31).

Comment from CPAG

This decision is authority (not undermined by HMRC v LH) that termination of certain legacy benefits under regulation 8 can be avoided where the claim is withdrawn before the issue of a DWP ‘stop notice’. It should be capable of application to the similar arrangements that apply regarding termination of housing benefit and stop notices to local authorities.

Summary

The claimant was entitled to child benefit for her son, and also got the care component of disability living allowance (DLA) for him. The claimant and her husband had worked in the UK. They ceased paid work and went to live in Spain in 2011. Entitlement to the care component of the DLA continued but (as eventually decided by HM Revenue and Customs (HMRC)) entitlement to child benefit was lost due to the national (UK) rules not being satisfied, and the UK no longer being considered the competent state for payment once residence had commenced in Spain. That was reversed by Judge Jacobs in the Upper Tribunal in WC v HMRC (CF) [2019] UKUT 289 (AAC), where it was decided that, under Article 7 (on waiving of residence rules) of EC Regulation 883/04, the UK had remained the competent state for payment of benefit, so that child benefit was ‘exportable’ to another member state of the EU. 

The Court of Appeal unanimously upheld the further appeal of HMRC. Child benefit was not exportable to the EU in this case and consequently the claimant’s entitlement had stopped when the domestic rules on residence ceased to be satisfied on the move to Spain. WF v HMRC had wrongly held that the competent state remained the UK under Article 7 of Regulation 883/04. Instead, the competent state had changed to being Spain, under the default provision (deeming the state of residence to be the responsible or ‘competent’ state for payment of benefit) at Article 11(2)(e). 

Giving the lead decision for the court, Sir Launcelot Henderson accepted that Article 7 had a narrower application than that adopted in WF v HMRC, so it applied only in order to prevent the competent state from avoiding payment on the sole basis that the claimant did not reside in the state. It did not in itself provide that for a family benefit the competent state would not change following the start of residence in another state. In this case, Article 11(2)(e) applied so that the competent state for payment of the family benefit was the state of residence. The judge considered that the language of Article 7: 

‘…presupposes the existence of an entitlement to the cash benefits in question, and that its purpose is merely to prevent any reduction etc in those benefits because the beneficiary or members of his or her family “reside in a Member State other than that in which the institution responsible for providing benefits is situated.” That appears to me to be a reference to the competent institution, in a situation where there has been no change in the applicable legislation referred to in the first limb of the article... But if there is a change in the applicable legislation, I agree with HMRC that Article 7 cannot be invoked to provide an independent basis for the continued payment of UK child benefit. The correct analysis in such a case is that the UK child benefit ceases to be payable as a result of national law, and its cessation is not overridden by Article 7 because the underlying reason for the cessation is not the change of residence, but the change in applicable law’ (paragraph 99). 

This was distinguishable from the position regarding the DLA care component, which was exportable as a cash sickness benefit. That position was originally established by the European Court of Justice in Secretary of State for Work and Pensions v Tolley (Case C430/15, reported as [2017] 1 WLR 1261); but that was a case about a sickness benefit, not a family benefit, that turned on the specific provisions of Article 22 of EC Regulation 1408/71, the predecessor of EC Regulation 883/04.